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Capital gains on sale

Can someone help me with this. We have a business that generates sales through eCommerce but also manufactures some of the goods it sells. I have an offer of 500K to purchase only the ecomm side of the business leaving us the physical property which we own and all the machinery. The new buyer agrees to will allow us to continue to manufacture and sell with a new website as long as we do not sell items we do not manufacture... it's complicated but we like the deal.

The up side for us is that the sale will allow us to payoff our debts to banks and SBA essentially leaving us debt free and some cash to go forward. The down side is, would the sale incur a capital gains hit even if we are paying off debt with the proceeds and not actually closing the company ?

Cannot seem to find an answer to this.

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Answers (2)
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Dallas County, TX


You are right of course, except I have both a CPA and a tax accountant that have conflicting opinions. The CPA says that the asset sale is capital gains pass through at 20% and the accountant of many years says it's ordinary income and to make matters worse, there is a possibility of it being combined Ordinary income and capital gains when it is intangible assets being sold off on an S-Corp. Therefore, this question is not about saving money, it is a throw out there question to find out where the truth is so that I do not end up with an "oops" that will bankrupt me !

May 28, 2014
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The BAF Group LLC

Rather than accepting answers from people you do not know and have no way of validating, in terms of their qualifications to answer your question, you need to pay a dime and actually talk to a qualified CPA. If your Company is so successful, do you not have a CPA to handle your taxes? This is not something to trust to people on the Net, in order to save a buck! I applaud your sale and your methods, but make certain you are not cutting your own throat, in doing so.

May 23, 2014